BREAKING: Toyota and Tesla to partner on EV production in California

California governor Arnold Schwarzenegger, Tesla CEO Elon Musk and Toyota CEO Akio Toyoda held a joint press in Palo Alto, California to announce that the two companies would be collaborating on electric vehicle development and production, with Tesla will taking over the recently closed NUMMI factory in Fremont, CA to produce the Model S sedan.

Toyota will invest $50 million for a private placement of Tesla common stock and the state of California will provide a sales tax abatement to Tesla for capital equipment expenditures to tool up the plant. Musk estimated that the abatement will amount to about $20 million over the next several years.

According to Musk, production of the Model S will bring about 1,000 employees back to the NUMMI plant to produce about 20,000 cars a year at first, and as the facility expands – possibly to include the production of more models – it could employ up to 10,000 workers. Musk revealed that some employees have already been rehired, but was non-committal on the subject of union representation. NUMMI was the only Toyota plant in North America that was unionized.

An additional benefit to Tesla from this deal is that it will be able to take advantage of the Toyota production system and possibly some of Toyota's suppliers. That's sure to help Tesla avoid many of the logistical problems that hampered early Roadster production and costs.

Production of the Model S is still planned to start in 2012 and Musk said more advanced prototypes would be revealed later this year. No decisions have been made yet about additional vehicles to be produced at the plant which previously had a capacity of more than 300,000 vehicles a year.

The deal for the NUMMI plant leaves Downey, CA jilted at the altar with the city's mayor "feeling stabbed in the back by Tesla." The Toyota deal apparently came together very quickly and Musk acknowledged that he would still like to work with Downey, perhaps for a future Space-X facility. Hit the jump for all the details.

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[Source: Toyota]

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Tesla Motors and Toyota Motor Corporation Intend to Work Jointly on EV Development, TMC to Invest in Tesla

May 20, 2010 - Palo Alto, California, U.S.A. - Tesla Motors, Inc. (Tesla) and Toyota Motor Corporation (TMC) today announced that they intend to cooperate on the development of electric vehicles, parts, and production system and engineering support.

The two companies intend to form a team of specialists to further those efforts. TMC has agreed to purchase $50 million of Tesla's common stock issued in a private placement to close immediately subsequent to the closing of Tesla's currently planned initial public offering.

"I sensed the great potential of Tesla's technology and was impressed by its dedication to monozukuri (Toyota's approach to manufacturing)," said TMC President Akio Toyoda. "Through this partnership, by working together with a venture business such as Tesla, Toyota would like to learn from the challenging spirit, quick decision-making, and flexibility that Tesla has. Decades ago, Toyota was also born as a venture business. By partnering with Tesla, my hope is that all Toyota employees will recall that 'venture business spirit,' and take on the challenges of the future."

"Toyota is a company founded on innovation, quality, and commitment to sustainable mobility. It is an honor and a powerful endorsement of our technology that Toyota would choose to invest in and partner with Tesla," said Tesla CEO and cofounder Elon Musk. "We look forward to learning and benefiting from Toyota's legendary engineering, manufacturing, and production expertise."

TMC has, since its foundation in 1937, operated under the philosophy of "contributing to the society through the manufacture of automobiles," and made cars that satisfy its many customers around the world. TMC introduced the first-generation Prius hybrid vehicle in 1997, and produced approximately 2.5 million hybrids in the twelve years since. Late last year, TMC started lease of Prius Plug-in Hybrids, which can be charged using an external power source such as a household electric outlet. The company also plans to introduce EVs into the market by 2012.

Tesla's goal is to produce increasingly affordable electric cars to mainstream buyers – relentlessly driving down the cost of EVs. Palo Alto, CA-based Tesla has delivered more than 1000 Roadsters to customers in North America, Europe and Asia. Tesla designs and manufactures EVs and EV powertrain components. It is currently the only automaker in the U.S. that builds and sells highway-capable EVs in serial production. The Tesla Roadster accelerates faster than most sports cars yet produces no emissions. Tesla service rangers make house calls to service Roadsters.

Tesla Motors Announces Factory in Northern CaliforniaSilicon Valley factory will become the home of the Model S sedan

PALO ALTO, Calif. -- Tesla Motors has purchased the former NUMMI factory in Fremont, California, where it will build the Model S sedan and future Tesla vehicles. As recently as April of 2010, the NUMMI factory was used by Toyota to produce the Corolla and Tacoma vehicles using the industry-leading Toyota production system. It is one of the largest, most advanced and cleanest automotive production plants in the world.

It is capable of producing half a million vehicles per year or approximately 1 percent of total worldwide car production. The award-winning plant was the birthplace of the vaunted Toyota Production System, a widely copied system that lead to dramatic quality improvements and unprecedented manufacturing flexibility and worker satisfaction.

The Model S is expected to be the first pure electric premium sedan and is designed from the ground up to take full advantage of the electric vehicle architecture. The sedan, which Tesla unveiled in March 2009, has an anticipated base price of $49,900, including a federal tax credit, and is intended to deliver the foremost design and technology in the automotive world. With an optional extended-range battery pack, the Model S will travel over 300 miles per charge.

The factory is located in the city of Fremont near Northern California's Silicon Valley, very near Tesla's Palo Alto headquarters. The location means Tesla can hire best-in-class engineers in Silicon Valley. The short distance also ensures a tight feedback loop between engineering, manufacturing and other divisions within the company.

"The Tesla Factory effectively leverages an ideal combination of hardcore Silicon Valley engineering talent, traditional automotive engineering talent and the proven Toyota production system," said Tesla CEO Elon Musk. "The new Tesla Factory will give us plenty of room to grow."

Toyota produced its last car there just last month. Tesla began discussions to acquire the site this spring, when it was also evaluating opportunities in Downey and Long Beach. The turnkey nature of the facility with its recent production of top quality vehicles and its considerable room for expansion made it stand out from other sites.

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Anonymous

Anonymous

Anonymous

4 Years Ago

So for $50 mil Toyota gets rid of a white elephant (NUMMI), gets some good press and has somewhere to go to for stateside assembly of electric cars and possibly hybrids without having to spend nearly a billion to tool up the MS plant or continue to subsidize NUMMI. Tesla gets a nearly tooled factory with room to grow and - their purchasing agents wet dream - access to the Toyota supply base. 2012 is looking much more feasible...

I wonder what intellectual property (patents and such) Tesla might have had that could have been of interest to Toyota? Tesla would certainly have had an interest in access to Toyota's IP, if for no other reason than to raid their parts bins for mundane pieces that won't need to be designed from scratch.

Anonymous

Anonymous

4 Years Ago

The "official" statement points toward a long-term investment by Toyota in Tesla. I believe there's more to this story.

As we all know, the US Depaartment of Energy was to give Tesla a big loan to help production development and technology, and to jump-start Tesla's impending IPO. Then came news of Elon Musk's divorce and his wife's demands of 10% of his share nin Tesla. Since there is no way the government will allow any of its funds to help finance a divorce settlement, the feds are probably having second thoughts about the loan, thus forcing Tesla to find other sourcing.

I do believe that Musk is doing a good job, though some may disagree with me, but this chapter in his life could cause problems for Tesla-if the divorce gets really messy, both Toyota and Daimler could have second thoughts about their involvement. Personal problems sould not dictate a company's future, but this may be another case here. I personally want Tesla to succeed, but if Musk's domestic situation gets to be a bigger distraction, then it may be time for him to go.

Anonymous

4 Years Ago

ding ding

There is a lot more to this story and it all involves the US government. California needs NUMMI to stay open and Toyota wont make vehicles there. The US government wants a payout from Toyota and Toyota wants a PR story.

Tesla needs a new car quick and a factory that can build volume. They also need a sophisticated parts chain for mass production. Musk is nothing but a talking head with no technical knowledge or manufacturing experience. His plan was to IPO Tesla, cash out, and take that money to SpaceX rinse and repeat. Because of his ego and bumbling Tesla is nowhere near bringing the Model S to market. Nearly every car company in the world can build an EV like the Tesla. The reason why they don't is because there is virtually no market for the car. The Model S and other EVs that can get closer to $25k is the true big money market. The problem is that is very hard to get to.

Enter the deal. Toyota gets the US government off its back in exchange for supplying Tesla and keeping the NUMMI plant open. The government makes it look like their massive payoff to Elon Musk was done in good faith. Eventually all the good billionaires win when the Tesla IPO is far more successful with Toyota attached to the deal.